Can strike off companies take benefits of condonation of delay scheme 2018?

Trust you’re enjoying our corporate law updates with your loved ones. These days Striking-off name of the Companies from the register maintained by Registrar of Companies is a very hot topic. More than three lakh (+300000) Companies strike-off and two lakh (+200000) Directors are disqualified by Ministry of Corporate Affairs in last 6 months. After these steps stakeholders moved to High Court for the remedy and High Court directed to MCA for the same.

Ministry of Corporate Affairs launched Condonation of Delay Scheme 2018 (Code 2018) on 29/12/2017. This scheme is only launched for those Companies whose status is active in the Master Data of the Company at MCA Portal but Directors are disqualified due to non-filing of annual returns and financial statements of the Companies from the last three years.

After this remedy, one more issue arises in the market that what can do by those Companies whose Directors are disqualified and Company is struck off by MCA due to non-filing of annual returns and financial statements from last three years.

For this issue, a remedy is provided under section 252 of the Companies Act, 2013. The aggrieved parties may file an appeal before National Company Law Tribunals (NCLT) for the revival of the name of the Companies from the register maintained by Registrar of Companies. This process is too lengthy and costly. So it is not possible for every company to move NCLT for this.

Some aggrieved stakeholders moved to High Court through writ petition and request to provide a remedy for same. High Court issued some favourable judgements in many cases and allowed to Strike-off Companies to avail benefits of CODE-2018.

The petitioner claims that he is the Director of a private company named M/s Nature Garden Fruits Impex Private Ltd. (hereafter „the Company‟). The learned counsel appearing for the petitioner unequivocally states that the Company has not carried out any business for the past three years and its bank account is also not in operation for the past three years. The petitioner also did not file the requisite returns as required under the Companies Act, 2013 (hereafter „the Act‟). Consequently, the petitioner has incurred the disqualification under Section 164(2) of the Act.

The learned counsel appearing for the petitioner makes an unequivocal statement, on instruction of the petitioner, that the petitioner is desirous of availing of the Condonation of Delay Scheme -2018 (hereafter „CODS – 2018‟). However, since the Company has been struck off from the Register of Companies, it has been disabled from availing the benefits of CODS – 2018.

The petitioner is also not in a position to seek revival of the company by filing an appeal under Section 252 of the Act, since admittedly the Company has not carried out any business and was liable to be struck off from the Register. The petitioner states that, in fact, it would voluntarily seek dissolution of the Company under Section 248(2) of the Act, if it has the opportunity to do so.

This Court is of the view that since, admittedly, the Company is not carrying out any business and its bank account has not been operated for over three years, the petitioner ought to be provided the benefit of the CODS – 2018. Accordingly, this Court directs as under:-
(a) The petitioner may file all the requisite returns in relation to the Company to avail the CODS – 2018.
(b) The petitioner may also file the necessary resolutions for voluntarily striking off the name of the Company as required under Section 248(2) of the Act.
(c) The petitioner would also make a necessary application under CODS – 2018 alongwith the requisite charges.
(d) The aforesaid documents and applications will not be submitted online but in hardcopies to the Registrar of Companies.

The Registrar shall scrutinize the same, and if the same are found to be otherwise in accordance with Section 248(2) of the Act, the petitioner would be granted the benefit of the CODS – 2018. The removal of the Company from the Register under Section 248(1) of the Act would be deemed as striking off the Company under Section 248(2) of the Act, and the petitioner‟s application under CODS – 2018 would be sympathetically considered by the Registrar.

Since an unequivocal statement is made by the petitioner that he would pay the necessary charges and make the necessary application under the CODS – 2018, the impugned list of the disqualified directors, in as much as it includes the name of the directors, is stayed till 31.03.2018 or up till such time as the respondents take a final decision in the matter.

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